Frequently Asked Questions
What is Prequalification?
My real estate agent recommended that I get a pre-approval letter. What is a pre-approval letter, and why should I get one?
When mortgage lenders refer to "PITI" what are they referring to?
When my loan officer asks me if I want to waive escrows, what exactly does she mean?
What does my mortgage lender mean by points or origination fee?
How does the annual percentage rate differ from the interest rate?
How do I know what my interest rate will be?
Do I need to have a certain amount of money left after I buy my home?
What is the Debt-to-Income Ratio?
What is the difference between FHA and a VA loan?
What is Private Mortgage Insurance (PMI)?
Do I always have to have PMI on my loan?
Will I have two separate payments if I have a second lien?
What does my lender mean by "paper trail?"
Why did I receive a Truth-In-Lending?
Will I get a copy of my credit report and appraisal?
What inspections are required by the lender?
When will I find out what my final figure is for the total costs to close?
Where do I go for closing?
Where do I send my first mortgage payment?
What is Prequalification?
Pre-qualification is usually the first step after initial contact is made to the lender. When pre-qualifying a borrower, the lender gathers information about the income and debts of the borrower and makes a financial determination about how much house the borrower may be able to afford.
My real estate agent recommended that I get a pre-approval letter. What is a pre-approval letter, and why should I get one?
The lender gives a commitment letter that states the lender agrees to provide a mortgage to a homebuyer. Commitment letters help you set realistic goals while you're house-hunting, provide the same negotiating ability as a cash buyer, and enable you to move quickly once the perfect home is found.
When mortgage lenders refer to "PITI" what are they referring to?
PITI is principal, interest, taxes, and insurance, the components of a monthly mortgage payment.
When my loan officer asks me if I want to waive escrows, what exactly does she mean?
When you waive escrows, you take the responsibility of paying your own taxes and insurance rather than having them included in your monthly payment. Waiving escrows may add a small fee to your closing costs. You can only waive escrows if your loan to value is 80% or less on your first lien.
What does my mortgage lender mean by points or origination fee?
One point is equal to one percent of the loan amount. Points and origination fees are used to buy down the interest rate and are tax deductible on purchase transactions.
How does the annual percentage rate differ from the interest rate?
The annual percentage rate (APR) is the effective rate of interest for a loan if the calculation is based on the original loan amount less the closing costs. This is the rate that will appear on your preliminary Truth-In-Lending. Please note that the APR is higher than the interest rate on your real estate lien note.
How do I know what my interest rate will be?
Upon your request, your loan officer will search for the lowest rate and "lock" your rate. The "lock-in" guarantees the homebuyer an interest rate provided the loan closes with that buyer and specified property within a set period of time. The property lock-in also specifies the number of points to be paid at closing.
Do I need to have a certain amount of money left after I buy my home?
Most loan programs require a cash reserve sufficient enough to make the first two mortgage payments (PITI).
What is the Debt-to-Income Ratio?
A ratio used by lending institutions to determine whether a person is qualified for a mortgage.
Debt-to-Income is the total amount of debt, including credit cards and other loans, divided by total gross monthly income.
What is the difference between FHA and a VA loan?
An FHA loan is a loan guaranteed by the Federal Housing Administration. FHA issues specific guidelines for mortgages. A VA loan is a loan guaranteed by the Veterans Administration. To obtain a VA loan, the borrower must have served in the Armed Forces.
What is Private Mortgage Insurance (PMI)?
PMI is insurance required to cover the lender should the borrower default on the loan.
Do I always have to have PMI on my loan?
PMI can be eliminated by having a down payment of at least 20% or by obtaining a second lien with an 80-10-10 loan program.
Will I have two separate payments if I have a second lien?
The second lien is often from a different lender that is the first lien. Therefore, borrowers with a second lien will make two separate payments each month—one on the first lien and one on the second lien.
What does my lender mean by "paper trail?"
A "paper trail" is copies of all paperwork necessary to prove a financial transaction: copies of all checks, deposit slips, loan paperwork, forms to liquidate assets, etc.
Why did I receive a Truth-In-Lending?
Truth-In-Lending statements are sent to all borrowers after a loan application has been made, regardless of whether they have a contract on a property. The Truth-In-Lending Act is a federal law requiring lenders to reveal all of the terms of a mortgage. The APR that appears on your Truth-In-Lending Act will be higher than the interest rate on your Real Estate Lien Note.
Will I get a copy of my credit report and appraisal?
Upon request, we will send you a copy of your credit report. If we need a credit letter explaining any credit issues, we will notify you. You will receive a copy of your appraisal at your closing.
What inspections are required by the lender?
The lender requires an appraisal on all transactions. A clear termite report is required on VA transactions. If the appraiser recommends repairs or if repairs are mentioned in the contract, the lender will require that those repairs be done before closing. The appraiser will then perform a final inspection to assure that the repairs were completed. Appraisers seldom require repairs. If the termite report recommends treatment, treatment is required. We will need a receipt showing the name and amount of chemicals used.
When will I find out what my final figure is for the total costs to close?
The title company will prepare a Settlement Statement detailing the closing figures. We will review this statement and provide you with an amount for closing. If you need this figure more than 24-hours before closing, call our office and request a new good faith estimate. Remember to bring a cashier's check made payable to the title company.
Where do I go for closing?
Your closing will take place at the title company. The title company name and address appears in your sales contract. We can call the title company to schedule a time for your closing.
Where do I send my first mortgage payment?
Refer to your "First Payment Letter" in your closing documents to determine where to send your first mortgage payment. If you receive a statement from your new lender prior to the due date of your first payment, send your payment to the new lender. Otherwise, send your payment to ViewPoint Mortgage, as detailed in your "First Payment Letter." Remember to include your loan number on your check.
